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CASE NO.: Appeal (civil)  5320 of 2007

PETITIONER: Abdul Raheem

RESPONDENT: The Karnataka Electricity Board & Ors

DATE OF JUDGMENT: 20/11/2007

BENCH: S.B. Sinha & Harjit Singh Bedi

JUDGMENT: J U D G M E N T  [Arising out of  SLP (Civil) No. 24595 of 2005]

S.B. SINHA, J :          1.      Leave granted. 2.      Defendant in a suit for specific performance of contract is before us  aggrieved by and dissatisfied with a judgment and order dated 15.09.2005  passed by the High Court of Karnataka in R.S. A. No. 238 of 2000 whereby  and whereunder the appeal preferred by Respondent No. 1 herein arising out  of a judgment and decree dated 25.01.2000 passed in R.A. No. 5 of 1992  was dismissed.   3.      An agreement for sale was entered into by and between the defendant  - appellant and the plaintiff - Respondent No. 1 for sale of 4 acres, 4 guntas  of land in Survey No. 112/A, Chhidri village.  A suit for specific  performance of contract was filed by the plaintiff - Respondent No. 1 on the  premise that the appellant did not perform his part of contract.  The said suit  was dismissed.  It was, however, inter alia held by the Trial Court that  Respondent No. 1 was all along ready and willing to perform its part of  contract.  An appeal preferred thereagainst by the respondent No. 1 was  dismissed.   4.      The First Appellate Court in arriving at its decision inter alia held: (i)     Respondent No. 1 without any reason withheld payment of balance  consideration of Rs. 13,100/- and, thus, failed to perform its part of  contract. (ii)    Respondent No. 1 was not always ready and willing to perform its  part of contract and somehow wanted to transfer liability on the  defendant as regards conversion fine and measurement charges. (iii)   The findings of the Trial Court that the plaintiff \026 Respondent No.  1 was always ready and willing to perform its part of contract was  not correct.   (iv)    The plaintiff \026 Respondent No. 1 did not approach the court with  clean hands and, thus, was not entitled to the discretionary relief of  specific performance of contract. 5.      On a second appeal having been preferred by Respondent No. 1  before the High Court, the following substantial questions of law were  framed: \023i)  Whether both the courts have erred in  refusing the specific performance although the  respondents received full consideration amount  and a sum of Rs. 8,000/- towards development  charges? ii)     Whether the appellate court is justified in  holding that the plaintiff was not ever ready and  willing to perform his part of the contract? iii)    Whether the courts below have not  committed any error in directing to refund the  earnest money?\024

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6.      The High Court inter alia considering the stipulations made in  agreement for sale and other evidences brought on records, opined:

(i)     It was for the defendant to bear the conversion expenses.   Admittedly when the amount of Rs. 94,000/- and odd was paid to  him, he was bound to perform his part of contract by executing a  deed of sale in favour of the plaintiff \026 Respondent No. 1.   (ii)    The First Appellate Court failed to interpret the clauses of the  agreement in their proper perspective.   (iii)   It applied the provisions contained in Section 22 of the Specific  Relief Act directing refund of the earnest amount only in a  mechanical manner.   7.      The plea of Respondent No. 1 that it was ready and willing to forgo  four guntas of land was held by the High Court sufficient to meet the  demand of the defendant \026 appellant stating: \02315. For the foregoing reasons, it is to be held that  both the Court below have erred in interpreting Ex.  P.1 in the proper perspective and rejecting for  specific performance.  Hence, the substantial  question No. 1 rests in favour of the appellant and  further the finding of the lower appellate court for  the plaintiff was not ready and willing to perform  his part of contract is with a basis and as such the  same is to be reversed and as also the 2nd  substantial question of law to be held in favour of  the appellant.  In so far as the 3rd substantial  question of law is concerned in the event if the  courts below have considered the fact of hardship  and in the event if the courts below would have  ordered for specific performance, then order for  refund of money instead of ordering for specific  performance would be perverse.  Accordingly, it is  held necessarily in favour of the appellant.\024

8.      Mr. Nagendra Rai, learned senior counsel appearing on behalf of the  appellant submitted that the purported substantial questions of law  formulated by the High Court do not meet the requirements of Section 100  of the Code of Civil Procedure (Code).  It was further urged that having  regard to the factual findings arrived at by the First Appellate Court, the  High Court should not have interfered therewith in exercise of its power  under Section 100 of the Code. 9.      Mr. Basava Prabhu S. Patil, learned counsel appearing on behalf of  the respondents, on the other hand, drew our attention to the factual matrix  involved in the matter.  It was contended that Respondent No. 1 was put in  possession pursuant to the agreement for sale.  A question, however, arose as  to who on conversion of the user of the land would pay the conversion fine.   It was submitted that Respondent No. 1 paid the said amount also.        In the aforementioned situation, interpretation of Clause 3 of the  agreement arose for consideration in the factual matrix obtaining in the  matter, viz., Respondent No. 1 not only paid a sum of Rs. 73,000/- out of the  total amount of consideration of Rs. 86,100/- but also paid a sum of Rs.  21,431.55 and Rs. 35.00 towards the conversion fine and measurement fees  respectively.   10.     A substantial question of law ordinarily would arise from the finding  of facts arrived at by the Trial Court and the First Appellate Court.  The  High Court\022s jurisdiction in terms of Section 100 of the Code is undoubtedly  limited.   11.     The question as to whether the plaintiff was ready and willing to  perform its part of contract by itself may not give rise to a substantial  question of law.  Substantial question of law should admittedly be  formulated relying on or on the basis of findings of fact arrived at by the  Trial Court and the First Appellate Court. 12.     However, there cannot be any doubt whatsoever that consideration of  irrelevant fact and non-consideration of relevant fact would give rise to a

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substantial question of law.  Reversal of a finding of fact arrived at by the  First Appellate Court ignoring vital documents may also lead to a substantial  question of law.         In Vidhyadhar v. Manikrao and Another [(1999) 3 SCC 573], this  Court held: \02423. The findings of fact concurrently recorded by  the trial court as also by the lower appellate court  could not have been legally upset by the High  Court in a second appeal under Section 100 CPC  unless it was shown that the findings were  perverse, being based on no evidence or that on the  evidence on record, no reasonable person could  have come to that conclusion.\024         [See also Iswar Bhai C. Patel alias Bachu Bhai Patel v. Harihar  Behera and Another (1999) 3 SCC 457]

13.     Ordinarily, we would have allowed the appeal on the failure of the  High Court to formulate substantial questions of law within the meaning of  Section 100 of the Code, but, we feel that as the plaintiff \026 Respondent No. 1  had already parted with a substantial portion of the consideration amount as  also upon having paid a large sum towards conversion charges, in the  interest of justice another opportunity should be given to the High Court to  frame proper substantial questions of law arising in the matter. 14.     We may, however, notice a few decisions in regard to the jurisdiction  of the High Court under Section 100 of the Code.         In Commissioner of Customs (Preventive) v. Vijay Dasharath Patel  [(2007) 4 SCC 118], this Court held:   \02322.We are not oblivious of the fact that the High  Court\022s jurisdiction in this behalf is limited. What  would be substantial question of law, however,  would vary from case to case.    23. Moreover, although, a finding of fact can be  interfered with when it is perverse, but, it is also  trite that where the courts below have ignored the  weight of preponderating circumstances and  allowed the judgment to be influenced by  inconsequential matters, the High Court would be  justified in considering the matter and in coming to  its own independent conclusion. (See Madan Lal v.  Gopi.)    24. The High Court shall also be entitled to opine  that a substantial question of law arises for its  consideration when material and relevant facts  have been ignored and legal principles have not  been applied in appreciating the evidence. Arriving  at a decision, upon taking into consideration  irrelevant factors, would also give rise to a  substantial question of law. It may, however, be  different that only on the same set of facts the  higher court takes a different view. [See Collector  of Customs v. Swastic Woollens (P) Ltd. and  Metroark Ltd. v. CCE.]  

25. Even in a case where evidence is misread, the  High Court would have power to interfere. (See  W.B. Electricity Regulatory Commission v. CESC  Ltd. and also Commr. of Customs v. Bureau  Veritas.)    26. In Dutta Cycle Stores v. Gita Devi Sultania this  Court held: (SCC p.   587, para 4)

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\0234. Whether or not rent for the two months  in question had been duly paid by the  defendants is a question of fact, and with a  finding of such fact, this Court does not  ordinarily interfere in proceedings under  Article 136 of the Constitution, particularly  when all the courts below reached the same  conclusion. But where the finding of fact is  based on no evidence or opposed to the  totality of evidence and contrary to the  rational conclusion to which the state of  evidence must reasonably lead, then this  Court will in the exercise of its discretion  intervene to prevent miscarriage of justice.\024\024

       [See also P. Chandrasekharan and Others v. S. Kanakarajan and  Others, (2007) 5 SCC 669]. 15.     We, therefore, set aside the impugned judgment and remit the matter  back to the High Court for consideration of the matter afresh upon  formulation of a substantial question of law.  The appeal is allowed.  No  costs.